Centex in Temecula shuts down tract less than half complete

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Submitted by temeculaguy on September 11, 2008 - 10:24pm

I confirmed that centex has shut down it's Hemmingway tract in Redhawk, is selling the models and has sold the land to another company (which is not a homebuilder) who has no immediate plans to build. Current owners get to live on a half finished street, some of the houses have empty lots in between two finished homes and the models are completely stranded with twenty or so graded and empty lots between them and where they built the other homes. I'd estimate only 1/4 of the lots were built on. During the 1992-1996 market when this happened, some tracts never put the "cap" on the streets and the city never accepted them, the builder fled and the homeowners were left to maintain their own street. I'm not sure if this will be the case since the builder didn't belly up but just decided to call it quits on that project.

This is the first I've seen where the builder just packed up and left a half finished project, I doubt it will be the last. I wonder if this will scare off buyers in new tracts for fear that it wont ever be completed and then later filled in with "who knows what."

Centex's other project is far less desirable than Hemmingway, I give it three months tops, they currently are finishing a phase and didn't start the next one.

I wonder who is next?

Submitted by barnaby33 on September 11, 2008 - 10:28pm.

Whenever I think of Temecula, I also think of Eastlake and Otay. Are there are developments in the same predicament there?
Josh

Submitted by paramount on September 11, 2008 - 11:00pm.

TG: The last time I checked the pricing on the models in Hemingway they are asking mid 400's - and that was about a week ago. The pricing is way off.

Laurel now has a larger model available for 338k (~3000 sq ft) and even a 2600 sq ft model for 317k. I have been tempted - these lots back right up to Redhawk.

Redwood is still in the low 400's minimum (best deals).

The only problem I see with Stratford is the proximity to the High School with that 50 ft tall fence right across the street. Other than that I liked Stratford, but again really no drop in prices here either.

I think your right, Stratford's days are numbered - I don't see them finishing that entire community.

At the same time, I wonder about Laurel and Redwood as well.

Submitted by temeculaguy on September 11, 2008 - 11:26pm.

paramount, Stratford's largest problem in my view isn't the High school (but that is a considerable one) it is that it adjacent to the indian reservation. It's also the part that has few houses and is used for off road vehicles, of which you have no ability to complain about since noise ordinances do not apply there. There is also no zoning protection, the can put anything behind your house (power plant, sewage tratment, you name it, you can't complain). They are becoming better neighbors and that fear is vanishing as the years roll on but it still bugs me. You are right, hemmingway is still clinging to 400k to their dying breath with only one model and three standing inventory left as of yesterday. I'm sure there are 4 suckers left out there who don't mind living next to a weed farm.

You are spot on in your analysis of the other tracts. I might add that mid 200's for shorts and repos are popping for 2500 sq on the completed side of wolf and 310k will get you 3100 sq and a 3 car non tandem so the builders are still overpriced but closer. Redwood had a 6br short list for 375k today on fireside, that tract has mid 3's written all over it. Laurel will soon run out of buyers as the financing rules change oct 1st and it is more entry level than redwood, look to be tempted in the mid 2's by christmas (it does have the best location, along with redwood, furthest from the casino). I think stan pac stays with it and just goes cheaper but they have a long way to go to build out. They bought the land much earlier and cheaper as the primary builder, the sub builders (lennar, woodside) will begin tent folding operations first and probably before the year is out. I still hate the 3k a year mello roos for wolf, but tempting it is now that 100 a square is becoming the norm for repos and shorts.

The most overpriced builder left is Mcmillan at Morgan, still 100k over repos within their tract, my money is on them to fold tents next.

Submitted by rube on September 11, 2008 - 11:47pm.

as a person in this business, i can tell you that there are a lot of tracts in varying stages of entitlement and construction that are changing hands right now. there are indeed investors/developers interested in the fire sales, but many of these tracts are way upside down. when you're dealing with $20-$50M loans, you won't find many homebuilders willing to write checks at closing(and even fewer banks willing to sell short). so they go back to the bank. while i can't say for certain whether Centex did actually find a buyer for their most likely non-performing asset, i think it is much more likely they let the piece go back to the bank. what the bank will eventually do with it is the real question, with implications that reach far into the fibers of the entire economy.

just be wary of these projects, especially if you are interested in buying a house in one of these half-built numbers, ESPECIALLY if there is an HOA that will need to fund amenities with less than expected revenue.

Submitted by Aecetia on September 12, 2008 - 9:48am.

We bought in the 90's and caught a falling butter knife. We had to sell first, so it was kind of a wash. Our development went through 3 different owners and there were some issues regarding the construction that occurred under the different developers. It became problematic when we (the association) had to sue all three for construction problems. Anyone buying under similar circumstances should be wary. That being said, the prices continued to fall until the complex was built out. It looks like those of you who want to buy there will be in for great bargains.

Submitted by hipmatt on September 12, 2008 - 9:55am.

This isn't the first or the last in Temecula to have a builder jump ship and leave graded pads just sitting there to become weed gardens. I'v seen it just on the west side of butterfieled stage rd, in Murrieta, the re are numerous communities that won't be completed, Temecu Hills did this last RE bust, and there will be many more across the Temecula Area. Spencers Crossing will be minus the planned clubhouse and pool.

Time to start jumping your dirt bikes on the pads everyone.

Submitted by temeculaguy on September 12, 2008 - 10:46am.

matt, I lived here and in a half finished tract in the early 90's, no problems with the builder since they stayed in business and honored their warranty but and with no HOA, there was no financial burden. You dirtbikers did get a little irritating since you seem to love those stair stepped graded pads that go up hills. Last time around Temeku actually didn't start, just built the golf course, graded and stopped so nobody got abandonded. There were plenty of walk aways but so far in this bust this is the first I've seen. Do you know of another builder walking away from a partially built tract that is partially occupied in this bust so far? I stay to the south so I don't monitor what happens in the other parts of the valley.

Submitted by PadreBrian on September 12, 2008 - 11:03am.

Yeah, this is just like the last downturn when Bush Sr left.

Runs in the family.

Submitted by PadreBrian on September 12, 2008 - 11:08am.

This time it might take 20 years for them to finish building...which is a good thing...

That whole valley has shitty infrastructure.

Submitted by hipmatt on September 12, 2008 - 12:07pm.

I'm pretty sure these guys aren't gonna finish...

http://spencerscrossing.com/community.php

Submitted by Veritas on September 12, 2008 - 7:04pm.

Must be the dem. congress full of dip $hit$ causing the problem. You cowards always blame Bush for your own stupidity.

Submitted by PadreBrian on September 12, 2008 - 10:25pm.

You haven't been here very long. This board has been around before the democrats even took control in Dec 2006. Things were way way way out of hand in before that 2004, 2005, 2006. Everyone keep drinking the kool-aide and spending the "free" money the fed was tossing from helicopters.

Submitted by svelte on September 13, 2008 - 8:38am.

Looks like quite a few of us got to live on half-finished streets during the 90s downturn.

We actually viewed it with pleasure as that gave us a nice view we didn't pay for - and we kept it about 10 years. The dirt bikes were annoying, but the final straw was when some a@#$%le 4x4 decided he could offroad right up against our fences at midnight!

The neighbors called the police, banded together, and put a halt to all that activity. It was fun watching police dirt bikes chase the rogue dirt bikes down over the next few weeks. Next, the families w/offroad toys moved out. And the neighborhood was at peace once again.

The only other downside was the developer went bk so we were left to fend for ourselves wrt warranties. Lawyers quickly pointed out that their insurance companies were still around, though.

Submitted by Veritas on September 13, 2008 - 10:03am.

PadB:

If Congress was doing such a great job this would not be happening:

"WASHINGTON — Congressional job approval ratings have sunk to their lowest point in three decades, according to the latest Gallup Poll.
A survey of 1,016 adults taken July 10-13 found that 14% approve of the job Congress is doing. That's half President Bush's record low 28% job approval number, and the lowest congressional rating since Gallup first began asking the question in 1974."
http://www.usatoday.com/news/washington/...
Maybe it is even lower now. Who is drinking the Kool-Aid?

Submitted by svelte on September 13, 2008 - 12:45pm.

hipmatt wrote:
I'm pretty sure these guys aren't gonna finish...

http://spencerscrossing.com/community.php

I know after awhile it is hard to come up with original floor plans, but if you remove BR4, the 3rd bay, and the upstairs room from the Hathaway, then you have the same floor plan as many of the homes built in Mira Mesa during the 1970s if my memory serves me correctly.

Submitted by PadreBrian on September 14, 2008 - 12:21am.

PadreBrian wrote:
You haven't been here very long. This board has been around before the democrats even took control in Dec 2006. Things were way way way out of hand in before that 2004, 2005, 2006. Everyone keep drinking the kool-aide and spending the "free" money the fed was tossing from helicopters.

Submitted by Centex Orchard Glen on September 18, 2008 - 2:40pm.

Hey, what is going to happen to the Mello Roos Tax in these unfinished developments? The Mello Roos Tax was based on the entire development being complete. Is it going to go away? Be reduced? Or enforced in full when the next builder takes over? So far I do not have this tax on my tax bill.

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